Outcome of the extraordinary European Council meeting and of the meeting of the Heads of State and Government of the euro area Member States

European Parliament – Conference of Presidents

Brussels, 16 March 2011

Thank you very much Mr President,

President of the European Council,

Honourable Members

We are all dismayed by the tragic events unfolding in Japan. It is with great admiration that we assist the struggle of this people to face the succession of appalling events.

Yesterday we have received a request for humanitarian assistance from the Japanese authorities that we are dealing with expeditiously. We also stand ready to provide further and more specific assistance regarding the situation in nuclear power plants if so requested. The people of Japan know that they can count on Europe's solidarity and support in this moment of grievance.

At the same time we are also taking all the necessary preventive measures related with the safety of our citizens. We will also assess the state of preparedness in the EU to respond to similar situations.

As we discussed last week in this House we had the rare experience on Friday of an extraordinary meeting of the European Council followed by a meeting of the Heads of State or Government of the Euro area.

As you know, the main focus of the European Council was the situation in Libya and the situation in the Southern Mediterranean. Since President Van Rompuy gave very important elements on Libya, I will not repeat what he said. Let me just focus on the Commission contribution to the strategy for the Southern Mediterranean. Together with the High Representative I presented the Commission's contribution in terms of a Communication how we are assisting the countries of the Southern Mediterranean in their transition process: a Partnership for Democracy and Shared Prosperity. It follows an incentive-based approach founded on positive conditionality. Those countries which embark in political and economic reforms should count with more assistance from Europe.

The proposal was broadly welcomed by the Heads of State and Government. But still we know that we have a lot of work ahead of us to build the kind of partnership we propose.

Regarding the specific issue of migration which is of real concern to some of our Member States, I announced that the Commission will bring forward a Communication on migration and refugee flows to be discussed at the June European Council.

Let me turn now to the Euro area meeting. Last week, I reminded this House that the Commission has been for a long time asking the Member States to commit to higher level of economic policy coordination and stronger economic governance, especially in the Euro area. And this is now accepted. This was not accepted some time ago.

I also stressed that the proposal of a Pact that was called a Pact for Competitiveness was raising legitimate concerns that should be answered.

I was very clear, and I spoke to you last week, about the key principles to be observed in this matter. A week later, I am pleased to report you that all these principles have been taken up in the paper that President van Rompuy and I presented on Friday, and they have been agreed by the Heads of State and Government.

The Pact for the Euro will fit with the existing architecture of economic governance and policy coordination at European level. It will be implemented in full respect of the Treaty and the respective roles of the European institutions, including the European parliament.

This was far for being taken for granted when the exercise began. Indeed, at the time some considered that the Pact should be purely intergovernmental.

But this battle was won, and the contribution of this House for it was important. I want to thank the Parliament for the clear position it took in defence of the community approach.

It is a serious Pact with important commitments in areas of predominantly national competences but which are fundamental to secure competitiveness within the euro area. But we also have made clear that competitiveness is an indispensable contribution for growth and jobs, we want sustainable and inclusive growth, which is our main objective as expressed in our Europe 2020 strategy. The main targets for Europe are sustainable, inclusive growth. And competitiveness is an instrument to achieve that kind of growth. Structural reforms are needed and the Pact is a useful contribution for this endeavour.

In fact as you can read in the Pact and I quote: "It will be in line with and strengthen the existing economic governance in the EU, while providing added value. It will be consistent with and build on existing instruments (EU 2020, European Semester, Integrated Guidelines, Stability and Growth Pact and new economic surveillance framework)"; and the text goes on "these new commitments will thereafter be included in the National Reform and Stability Programmes and be subject to the regular surveillance framework, with a strong central role for the Commission in the monitoring of the implementation of the commitments, and the involvement of all the relevant formations of the Council and the Eurogroup. The European Parliament will play its full role in line with its competences. Social partners will be fully involved at the EU level through the Tripartite Social Summit", end of quotation.

As you see, the participation of social partners is explicitly mentioned. I believe this is important to ensure the balance approach we believe is important for the Pact. And the Commission will play a central role in monitoring the implementation of the commitments. Besides, the Pact is open to non-Euro-area Member States if they so wish and I hope that most of them will join the Pact as soon as the next European Council.

In a word, the Pact for the Euro will not be a parallel exercise, complicating an already complex exercise of governance in the European Union. This is not a closed club; it is made in the framework of the European Union. This really represents an added value both in terms of policy and in terms of ambition, because we need a stronger governance for the euro area.

Head of States and Government of the Euro area have also agreed on a quasi automaticity of their decisions on the Commission's recommendations in the implementation of the Stability and Growth Pact (SGP) as the conclusions say, and I quote: "In deciding on the steps in the SGP the Council is expected to, as a rule, follow the recommendations of the Commission or explain its position in writing." Once again it has been a point that has been highlighted by many of you in this Parliament.

Moreover, they have agreed that "the introduction of a financial transaction tax should be explored and developed further at the Euro area, EU and international levels." I think this is also important in terms of the message it gives to our societies that the necessary adaptations to the current situation should be shared in a proportionate and fair way among all stakeholders.

We have been able to reach such a result thanks to the close and effective coordination between the President of the European Council and the President of the Commission and the input from our debates last week in Strasbourg. That is why I want to thank you once again because I think the positions taken by the European Parliament were indeed very important for the final consensus that was reached at the Euro area summit.

Last week, I also underlined that the Pact is but one part of our overall response to ensure the stability of the euro area. Progress must be made in all the other areas of our response, notably as we said in our Annual Growth Survey, in enhancing the effective financing capacity of the existing European Financial Stability Fund and broadening its scope while preparing the establishment of a permanent mechanism as from 2013.

Here again, a week later, I can only express my satisfaction with the outcome of the Euro area summit. What we have put forward in the Annual Growth Survey is now accepted. European leaders have agreed they will make sure the full amount is available, that is 440 billion euros for the current Fund, and its scope widened. And an agreement has also been reached on the size of the European stability mechanism (500 billion euros); the conditions under which it will be used and the pricing arrangements. It is a significant step forward. We could indeed go further, but I think nevertheless the consensus that was reached represents no doubts a progress compared to the current situation.

I also note with satisfaction that there was enough flexibility to agree on a reduction of the interest paid by Greece and on the extension of the repayment of its loans. On behalf of the Commission I have the occasion to support this and in fact to explain that this increased flexibility is not just a question of fairness to Greece that is making very important efforts, but it also is a matter of credibility of our operations because it is a way to assure the sustainability of the payment of the debt.

I am personally persuaded that in the same kind of flexibility, including possible revision of the interest rate, will be also open for Ireland.

I would like to conclude with two brief remarks.

First on the upcoming European Council on 24-25 March: what Europe will put in place then will be a real game-changer. With the Annual Growth Survey and the Pact for the Euro we will have a clear plan with priorities and commitments to strengthen competitiveness, growth, employment, fiscal consolidation and financial stability and once again growth that we want sustainable and inclusive. Thanks to the European Semester we have a system to translate this into national plans in a way should guarantee strong coordination and convergence. The Commission will not abdicate from this role. We believe it is critically important our role to ensure the consistency of our efforts. The Commission's six proposals for economic governance approved yesterday unanimously by the Council are the cornerstone of our comprehensive approach for strengthened economic governance. It will set up a system of surveillance and accountably, which includes sanctions. And in fact last week there was also a consensus to reinforce the rules of economic governance. Finally with the current European Financial Stability Fund by 2013 the permanent European stability mechanism we have a tool to guarantee the stability of the Euro area as a whole, if need be.

My second remark is on the two meetings held last Friday. I think we can draw a key lesson from both of them. Europe is living up to truly historic challenges at home and abroad and Europe is at its best and can make progress when we find compromises that unite us.